self-driving-carsWithin the next 12 months many car companies will offer various forms of hands-free driving modes.

And with most states in the U.S. lacking regulations specifying whether or not drivers need to keep both (or any) hands on the wheel, automakers are almost free to experiment at will.

This summer Tesla Motors (NASDAQ: TSLA) will offer a software update that will give Model S sedans the ability to run on an autopilot mode.

And in January Audi (OTC: AUDVF) plans to introduce a car that can maneuver through traffic jams.

Mercedes-Benz (OTC: DDAIF) already has a lane-keeping feature on the market, as does Infiniti (OTC: NSANY). This feature allows drivers to remove their hands from the wheel on straight and uneventful roads.

There is little doubt that the new wave of auto technologies is one of the most exciting and talked about areas of innovation today, regardless of whether you’re for or against it. And this is especially true since there is potential to transform more than just the modern automobile. Delivery trucks, excavation equipment and many other on- and off-road vehicles can benefit from new technologies too.

This very real and fast-moving trend is fueling growth for a number of companies that supply the auto industry with the latest and greatest technologies.

Commonly known as Advanced Driver Assistance Systems (ADAS), the latest advances are aimed at assisting drivers in making complex maneuvers, and soon will control the vehicle without driver assistance.

ADAS features blind-spot monitoring, night vision, lane-keeping assist, collision warning (and avoidance maneuvers) and adaptive cruise control.

Current ADAS systems are focused largely on helping drivers park and make simple maneuvers. But the next generation of semiconductors are being designed to enable more of a co-pilot system that can make decisions, including hitting the brakes and turning on cruise control. These actions can be done even if the driver doesn’t initiate them.

Modern ADAS System

self-driving-car

Image courtesy of Freescale Semiconductor

Advances in new chips are expected to help auto manufacturers rapidly advance their vision of a self-driving car. Cars aren’t the only thing they are connecting, though.

These solutions are also used in wearable technologies, secure identification products, connected home solutions and nearly everything else out there that connects through a microchip.

But I think that the degree of complexity and the safety issues surrounding self-driving automobiles makes it a particularly entertaining topic of discussion. Plus, automobiles represent a massive market, even when compared to the housing market.

There are over 250 million registered vehicles in the U.S., versus just over 133 million housing units. That’s a significantly large market. And of course, the number of new cars sold each year is far greater than the number of new homes built.

I think a lot of people have a difficult time envisioning a world filled with self-driving cars. And to be honest, I’m not sure I’m particularly thrilled with the idea myself.

But between where we are right now and that extreme, there is a lot of room for technology to make big improvements in safety and driver experiences. The fact is that there are a lot of bad drivers on the roads today, and I expect that more computer assistance can help reduce accidents.

I’ll have a lot more to say about this topic later this week. Look for a more thorough discussion on self-driving cars on Thursday, as well as opportunities to get my research on one particularly compelling stock to play the trend.

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